Is Now the Time to Buy Admiral Group plc (ADM)?

LONDON – I’m always searching for shares that can help ordinary investors like you make money from the stock market.

So right now I am trawling through the FTSE 100 and giving my verdict on every member of the blue-chip index. Simply put, I’m hoping to pinpoint the very best buying opportunities in today’s uncertain market.

Today I am looking at Admiral Group plc (LON:ADM) to determine whether you should consider buying the shares at 1,357 pence.

Admiral Group plc (LON:ADM) I am assessing each company on several ratios:

Price/Earnings (P/E): Does the share look good value when compared against its competitors?

Price Earnings Growth (PEG): Does the share look good value factoring in predicted growth?

Yield: Does the share provide a solid income for investors?

Dividend Cover: Is the dividend sustainable?

So, let’s look at the numbers:

Stock Price 3-Yr. EPS Growth Projected P/E PEG Yield 3-Yr. Dividend Growth Dividend Cover
Admiral 1,357p 32% 14.2 14.2 5% 32% 2.2

The consensus analyst estimate for this year’s earnings per share is 95.5 pence (no growth) and dividend per share is 90.3 pence (no growth).

Firstly, I should mention the consensus analyst estimate for this year’s 90.3 pence per share dividend includes potential special dividends the company may declare. (Since its flotation, Admiral Group plc (LON:ADM) has consistently paid special dividends alongside ordinary dividends). Based on the company’s ordinary dividend history, however, and evaluating City forecasts further, I believe the regular payout for this year may well be left unchanged at 43 pence per share.

Anyway, trading on a projected P/E of 14.2, Admiral Group plc (LON:ADM) appears to be slightly more expensive than its peers in the non-life insurance sector, which are currently trading on an average P/E of around 13. In addition, Admiral’s P/E and low near-term projected growth rate give a PEG ratio of 14.2, which cannot help with my analysis.

Currently, Admiral Group plc (LON:ADM) supports a 5% dividend yield, which is slightly above the sector average of 4.7%. However, this yield figure includes a one-off special dividend of 24 pence a share. With the special dividend excluded, I believe the yield could be closer to 3.2% — below the sector average.

That said, Admiral Group plc (LON:ADM)’s regular payout has grown a compounded 32% during the past three years, indicating that the regular payout could soon catch up to that of the group’s peers. Indeed, the regular dividend payout is more than two times covered by earnings, giving plenty of room for further growth.

So is now the time to buy Admiral?
2012 was Admiral’s 20th anniversary and the company’s most successful year to date. Indeed, within the company’s full-year results released only last week, Admiral announced group profits were up 15% to 345 million pounds. However, the company did report a full-year loss of 24 million poundsfor its international operations.

Nonetheless, the majority of Admiral Group plc (LON:ADM)’s divisions performed strongly and profits from the company’s comparison website, confused.com, expanded by 13% during 2012.

Furthermore, Admiral Group plc (LON:ADM) is seeking to expand its international operations and diversify into new markets. For example, the company recently started offering home insurance to its U.K. customers as well as launch a new online comparison website focused on customers within the United States.

Unfortunately, despite Admiral’s special divided and solid growth last year, the firm currently looks expensive compared to its peers and near-term earnings growth. So overall, I believe now does not look to be a good time to buy Admiral at 1,357 pence.

The article Is Now the Time to Buy Admiral Group? originally appeared on Fool.com and is written by Rupert Hargreaves.

Rupert does not own any share mentioned in this article.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

Top 6 Cities For The Ultra Rich to Live in Comfort

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!